AGRICULTURE DECISIONS - USDA 63 - Book 1, Part 2.pdfP. & S. Docket No. D-99-0010. Order Denying Petitions for Reconsideration. Filed March 26, 2004. P&S – P ack ers and Sto ck yards

AGRICULTURE DECISIONS

Volume 63

January - June 2004Part Two (P & S)Pages 317 - 351

THIS IS A COM PILATION OF DECISIONS ISSUED BY THE

SECRETARY OF AGRICULTURE AND THE COURTS

PERTAINING TO STATUTES ADMINISTERED BY THE

UNITED STATES DEPARTM ENT OF AGRICULTURE

AGRICULTURE DECISIONS

AGRICULTURE DECISIONS is an official publication by the Secretary of Agriculture consistingof decisions and orders issued in adjudicatory administrative proceedings conducted for theDepartment under various statutes and regulations. Selected court decisions concerning theDepartment's regulatory programs are also included. The Department is required to publish itsrules and regulations in the Federal Register and, therefore, they are not included inAGRICULTURE DECISIONS.

The published decisions and orders may be cited by giving the volume number, page numberand year, e.g., 1 Agric. Dec. 472 (1942). It is unnecessary to cite a decision's docket number, e.g.,AWA Docket No. 99-0022, and the use of such references generally indicates that the decision hasnot been published in AGRICULTURE DECISIONS.

Beginning in 1989, AGRICULTURE DECISIONS is comprised of three Parts, each of which ispublished every six months. Part One is organized alphabetically by statute and contains alldecisions and orders other than those pertaining to the Packers and Stockyards Act and thePerishable Agricultural Commodities Act, which are contained in Parts Two and Three,respectively. Beginning in Volume 60, each part of AGRICULTURE DECISIONS has all the partiesfor that volume, including consent decisions, listed alphabetically in a supplemental List ofDecisions Reported. The alphabetical List of Decisions Reported and the subject matter Index(from the beginning of the annual Volume) are included in a separate volume, entitled Part Four.

Consent decisions entered subsequent to December 31, 1986, are no longer published in thispublication. However, a list of consent decisions is included. Beginning in Volume 62, consentdecisions may be viewed in portable document (pdf) format on the OALJ website (see url below)and may be inspected upon request made to the Hearing Clerk, Office of Administrative LawJudges.

Volumes 59 (circa 2000) through the current volume of AGRICULTURE DECISIONS. are alsoavailable online at http://www.usda.gov/da/oaljdecisions/ along with links to other relatedwebsites. Volumes 39 (circa 1980) through Volume 58 (circa 1999) have been scanned and willappear in portable document format (pdf) on the same OALJ website. Beginning on July 1, 2003,current ALJ Decisions will be displayed in pdf format on the OALJ website in chronological order.

A compilation of past volumes on Compact Disk of AGRICULTURE DECISIONS. will be availablefor sale at the U.S. Government Printing Office On-line book store at http://bookstore.gpo.gov/ .

Direct all inquiries regarding this publication to: Editor, Agriculture Decisions, Office ofAdministrative Law Judges, U.S. Department of Agriculture, Room 1057 South Building,Washington, D.C. 20250-9200, Telephone: (202) 720-6645, Fax (202) 690-0790, and e-mailaddress of [email protected].

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LIST OF DECISIONS REPORTED

JANUARY - JUNE 2004

PACKERS AND STOCKYARDS ACT

MISCELLANEOUS ORDERS

EXCEL CORPORATION.P. & S. Docket No. D-99-0010.Order Denying Petitions for Reconsideration.. . . . . . . . . . . . . . . . 317 EXCEL CORPORATION.P. & S. Docket No. D-99-0010.Stay Order.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 335

DEFAULT DECISIONS

JERRY HAYES MEATS, INC., AND JEROME A. HAYES.P&S Docket No. D-03-0016.Decision and Order.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 337

RONALD C. PERKINS.P&S Docket No. D-03-0017.Decision and Order.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 342

CURTIS W. MINZENMAYER.P. & S. Docket No.-04-0001.Decision Without Hearing By Reason of Default.. . . . . . . . . . . . . 348

CONSENT DECISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 351

EXCEL CORPORATION63 Agric. Dec. 317

317


MISCELLANEOUS ORDERS

In re: EXCEL CORPORATION.P. & S. Docket No. D-99-0010.Order Denying Petitions for Reconsideration.Filed March 26, 2004.

P&S – Packers and Stockyards – Sanction – Civil penalty – Appropriate cease anddesist order – Expiration date for cease and desist order – Purpose of Packersand Stockyards Act – Impeding competition.

The Judicial Officer (JO) denied Complainant’s petition for reconsideration andRespondent’s petition for reconsideration and ordered Respondent, in connection withits purchase of livestock on a carcass merit basis, to cease and desist from failing tomake known to livestock sellers the factors that affect Respondent’s estimation of leanpercent. The JO rejected Complainant’s contention that a substantial civil penalty waswarranted, stating that, based on the unique circumstances in the proceeding, a ceaseand desist order is sufficient to deter Respondent and other packers from futureviolations of 9 C.F.R. § 201.99(a). The JO rejected Respondent’s contention that thecease and desist order was too broad. The JO stated a cease and desist order need onlybear a reasonable relation to the unlawful practice found to exist and the power to issuea cease and desist order is not limited to proscribing only the precise unlawful practicefound to exist, but includes power to prohibit variations of the unlawful practice toprevent the practice from reappearing in a slightly altered form. The JO also rejectedRespondent’s contention that section 202(a) of the 21st Century Department of JusticeAppropriations Authorization Act (28 U.S.C. § 530D) requires that the cease and desistorder expire after no longer than 3 years. Further, the JO rejected Respondent’scontentions that its violations of 9 C.F.R. § 201.99(a) were not grave and did notimpede competition.

Patrice H. Harps and Eric Paul, for Complainant.John R. Fleder and Brett T. Schwemer, and Jeff P. DeGraffenreid, for Respondent.Initial decision issued by James W. Hunt, Chief Administrative Law Judge.Order issued by William G. Jenson, Judicial Officer.

PROCEDURAL HISTORY

Harold W. Davis, Deputy Administrator, Packers and Stockyards

PACKERS AND STOCKYARDS ACT318

On March 29, 2001, Complainant moved to revise the Amended Complaint to1

conform to the evidence (Tr. 2260). Chief Administrative Law Judge James W. Hunt[hereinafter the Chief ALJ] granted Complainant’s motion in part allowingComplainant to revise the period during which Respondent’s violations of the Packersand Stockyards Act and the Regulations allegedly occurred and Complainant’s allegedestimated harm to hog producers caused by Respondent’s change in the formula usedto estimate lean percent in hogs (Tr. 2260-87). The revised Amended Complaint

(continued...)

Programs, Grain Inspection, Packers and Stockyards Administration,United States Department of Agriculture [hereinafter Complainant],instituted this disciplinary administrative proceeding by filing a“Complaint and Notice of Hearing” on April 9, 1999. Complainantinstituted this proceeding under the Packers and Stockyards Act, 1921,as amended and supplemented (7 U.S.C. §§ 181-229) [hereinafter thePackers and Stockyards Act]; the regulations issued under the Packersand Stockyards Act [hereinafter the Regulations] (9 C.F.R. §§201.1-.200); and the Rules of Practice Governing Formal AdjudicatoryProceedings Instituted by the Secretary Under Various Statutes (7 C.F.R.§§ 1.130-.151) [hereinafter the Rules of Practice]. On April 21, 1999,Complainant filed an “Amended Complaint and Notice of Hearing”[hereinafter Amended Complaint].

Complainant alleges that, during the period between October 23,1997, and June 1, 1998, Excel Corporation [hereinafter Respondent]violated section 202(a) of the Packers and Stockyards Act (7 U.S.C. §192(a)) and section 201.99 of the Regulations (9 C.F.R. § 201.99) byfailing to make known to hog producers a change in the formula used toestimate lean percent in hogs, prior to Respondent’s purchasing hogs ona carcass grade, carcass weight, or carcass grade and weight basis.Complainant alleges that, as a result of the change in the formula toestimate lean percent in hogs, Respondent paid hog producersapproximately $1,839,000 less for approximately 19,942 lots of hogsthan Respondent would have paid if Respondent had not changed theformula. (Amended Compl. ¶¶ II-III.) On May 18, 1999, Respondentfiled an “Answer” denying the material allegations of the AmendedComplaint.1


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(...continued)1

alleges Respondent violated section 202(a) of the Packers and Stockyards Act (7 U.S.C.§ 192(a)) and section 201.99 of the Regulations (9 C.F.R. § 201.99) during the periodbetween October 23, 1997, and July 20, 1998, and alleges additional economic harmincurred by hog producers as a result of Respondent’s change of the formula used toestimate lean percent in hogs. On May 7, 2001, Respondent filed “Excel Corporation’sAnswer to Revised Amended Complaint” which denies the material allegations ofComplainant’s revised Amended Complaint.

On February 7, 2002, after an oral hearing and after Complainant andRespondent filed post-hearing briefs, the Chief ALJ issued a “Decisionand Order” [hereinafter Initial Decision and Order]: (1) findingRespondent failed to notify hog producers of an October 1997 change inthe formula Respondent used to estimate lean percent in hogs prior tochanging the formula; (2) concluding Respondent violated section 202(a)of the Packers and Stockyards Act (7 U.S.C. § 192(a)) and section201.99(a) of the Regulations (9 C.F.R. § 201.99(a)) when Respondentfailed to notify hog producers of the change in the formula used toestimate lean percent in hogs; (3) ordering Respondent to cease and desistfrom failing to notify livestock sellers of any change in the formula usedto estimate lean percent; and (4) ordering Respondent to submit toarbitration with hog producers who sold hogs to Respondent betweenOctober 1997 and July 1998 under Respondent’s changed formula toestimate lean percent, who may have received less money for their hogsthan the hog producers would have received under the old formula, andwho have not otherwise been compensated or resolved the matter byagreement with Respondent (Initial Decision and Order at 26-27).

Complainant and Respondent each filed appeal petitions, and onJanuary 30, 2003, I issued a “Decision and Order:” (1) concludingRespondent violated section 202(a) of the Packers and Stockyards Act(7 U.S.C. § 192(a)) and section 201.99(a) of the Regulations (9 C.F.R.§ 201.99(a)) when Respondent failed to make known to hog producersthat it was changing the formula to estimate lean percent, prior topurchasing hogs on a carcass merit basis from those producers; and(2) ordering Respondent to cease and desist from: (a) failing to makeknown to sellers, or their duly authorized agents, prior to purchasing


In re Excel Corporation, 62 Agric. Dec. 196, 250 (2003).2

livestock, the factors that affect Respondent’s estimation of lean percent,including, but not limited to, any change in the formula used to estimatelean percent; and (b) failing to make known to sellers, or their dulyauthorized agents, prior to purchasing livestock, the details of thepurchase contract, including, when applicable, the expected date andplace of slaughter, carcass price, condemnation terms, description of thecarcass trim, grading to be used, accounting, and any special conditions.2

On February 10, 2003, Complainant filed “Complainant’s Petition forReconsideration,” and on February 14, 2003, Respondent filed “ExcelCorporation’s Petition for Reconsideration.” On March 5, 2003,Respondent filed “Excel Corporation’s Reply to Complainant’s Petitionfor Reconsideration,”and on March 12, 2003, Complainant filed“Complainant’s Reply to Respondent’s Petition for Reconsideration.” OnMarch 17, 2003, the Hearing Clerk transmitted the record to the JudicialOfficer for reconsideration of the January 30, 2003, Decision and Order.

Respondent’s exhibits are designated by “RX.” Transcript referencesare designated by “Tr.”

CONCLUSIONS BY THE JUDICIAL OFFICERON RECONSIDERATION

Complainant’s Petition for Reconsideration

Complainant seeks reconsideration of my conclusion that a civilpenalty is not appropriate in this case. Complainant contends that mycharacterization of Respondent’s violations of section 201.99(a) of theRegulations (9 C.F.R. § 201.99(a)) as grave, my finding that Respondentis a large business, and my finding that a substantial civil penalty wouldnot affect Respondent’s ability to continue in business, logically requirethe assessment of a substantial civil penalty. (Complainant’s Pet. forRecons.)

Generally, a substantial civil penalty is warranted where a respondent


321

commits a number of grave violations over a significant amount of time,the respondent is a large business, and a substantial civil penalty wouldnot affect the respondent’s ability to continue in business. However, thesanction in each case must be determined based on the facts of that case.Respondent committed a large number of violations of section 201.99(a)of the Regulations (9 C.F.R. § 201.99(a)) during approximately a9-month period, Respondent is a large business, and a substantial civilpenalty would not affect Respondent’s ability to continue in business.However, while section 201.99(a) of the Regulations (9 C.F.R. §201.99(a)) requires that each packer make known to hog producers thatthe packer is changing the formula to estimate lean percent, prior topurchasing hogs on a carcass merit basis, Complainant has not allegedthis specific violation in the past and this proceeding is one of firstimpression (Complainant’s Proposed Findings of Fact, Conclusions ofLaw, and Proposed Order at 88). The record establishes that, whileRespondent should have known that its failure to inform hog sellers of thechange in the formula to estimate lean percent, at the time ofRespondent’s violations, Respondent and others in the industry were notactually aware that the failure to inform hog sellers of a change in theformula was a violation of section 201.99(a) of the Regulations (9 C.F.R.§ 201.99(a)). Moreover, the record establishes that Respondent changedthe formula in an effort to obtain a more accurate estimate of leanpercent; not in an effort to harm hog sellers. The change in the formularesulted in some hog producers receiving more for their hogs and otherhog producers receiving less for their hogs.

Further, once Respondent became aware of Complainant’s positionregarding section 201.99(a) of the Regulations (9 C.F.R. § 201.99(a)),Respondent took remedial action by informing hog sellers of the changein the formula and making restitution to those who had received less fortheir hogs under the new formula than they would have received had theold formula been used to estimate lean percent.

Respondent’s lack of actual knowledge, Respondent’s purpose forchanging the formula, and Respondent’s remedial actions are not defensesto Respondent’s violations of the Packers and Stockyards Act and theRegulations; however, based on the unique circumstances in this


In re Geo. A. Heimos Produce Co., 62 Agric. Dec. ___, slip op. at 33-34 (Oct. 29,3

2003), appeal docketed, No. 03-4008 (8th Cir. Dec. 16, 2003); In re Steven Bourk(continued...)

proceeding, I conclude that a civil penalty is not necessary in order todeter Respondent and other packers from failing to make known to hogsellers, prior to purchasing hogs on a carcass merit basis, any change inthe formula used to estimate lean percent.

Complainant contends that my failure to assess a civil penalty againstRespondent has significant implications for the future enforcement of thePackers and Stockyards Act (Complainant’s Pet. for Recons. at 13-17).I disagree. My decision not to assess a civil penalty against Respondentis based upon the unique circumstances in this case. If the January 30,2003, Order raises expectations of a general policy of lenient sanctionsin the future, those expectations will be short-lived. The sanction in eachcase will be determined based on the facts in that case and my evaluationof the sanction necessary to deter future violations by the violator andother potential violators. Generally, a substantial civil penalty will bewarranted where a respondent commits a number of grave violations overa significant amount of time, the respondent is a large business, and asubstantial civil penalty would not affect the respondent’s ability tocontinue in business.

Complainant contends that I failed to accord any weight toComplainant’s sanction recommendation. While I did not adoptComplainant’s sanction recommendation, I did accord Complainant’ssanction recommendation weight, but rejected Complainant’srecommendation based on my conclusion that a civil penalty is notnecessary in order to deter Respondent and other packers from futuresimilar violations. The United States Department of Agriculture’ssanction policy does not require an administrative law judge or theJudicial Officer to adopt a complainant’s sanction recommendation.Instead, the recommendation of administrative officials as to the sanctionis not controlling, and in appropriate circumstances, the sanction imposedmay be considerably less, or different, than that recommended byadministrative officials.3


323

(...continued)3

(Decision as to Steven Bourk and Carmella Bourk), 61 Agric. Dec. 25, 49 (2002); Inre H.C. MacClaren, Inc., 60 Agric. Dec. 733, 762-63 (2001), aff’d, 342 F.3d 584 (6thCir. 2003); In re Karl Mitchell, 60 Agric. Dec. 91, 130 (2001), aff’d, 42 Fed. Appx.991, 2002 WL 1941189 (9th Cir. 2002); In re American Raisin Packers, Inc., 60 Agric.Dec. 165, 190 n.8 (2001), aff’d, 221 F. Supp.2d 1209 (E.D. Cal. 2002), aff’d, 66 Fed.Appx. 706, 2003 WL 21259771 (9th Cir. 2003); In re Fred Hodgins, 60 Agric. Dec.73, 88 (2001) (Decision and Order on Remand), aff’d, 33 Fed. Appx. 784, 2002 WL649102 (6th Cir. 2002) (unpublished); In re Reginald Dwight Parr, 59 Agric. Dec. 601,626 (2000), aff’d per curiam, 273 F.3d 1095 (5th Cir. 2001) (Table); In re GreenvillePacking Co., 59 Agric. Dec. 194, 226-27 (2000), aff’d in part and transferred in part,No. 00-CV-1054 (N.D.N.Y. Sept. 4, 2001), appeal withdrawn, No. 01-6214 (2d Cir.Apr. 30, 2002); In re James E. Stephens, 58 Agric. Dec. 149, 182 (1999); In re WesternSierra Packers, Inc., 57 Agric. Dec. 1578, 1604 (1998); In re Colonial ProduceEnterprises, Inc., 57 Agric. Dec. 1498, 1514 (1998); In re Judie Hansen, 57 Agric.Dec. 1072, 1141 (1998), appeal dismissed, 221 F.3d 1342 (Table), 2000 WL 1010575(8th Cir. 2000) (per curiam); In re Richard Lawson, 57 Agric. Dec. 980, 1031-32(1998), appeal dismissed, No. 99-1476 (4th Cir. June 18, 1999); In re Scamcorp, Inc.,57 Agric. Dec. 527, 574 (1998); In re Marilyn Shepherd, 57 Agric. Dec. 242, 283(1998); In re Allred’s Produce, 56 Agric. Dec. 1884, 1918-19 (1997), aff’d, 178 F.3d743 (5th Cir.), cert. denied, 528 U.S. 1021 (1999); In re Kanowitz Fruit & Produce,Co., 56 Agric. Dec. 942, 953 (1997) (Order Denying Pet. for Recons.); In re WilliamE. Hatcher, 41 Agric. Dec. 662, 669 (1982); In re Sol Salins, Inc., 37 Agric. Dec. 1699,1735 (1978); In re Braxton McLinden Worsley, 33 Agric. Dec. 1547, 1568 (1974).

FTC v. Colgate-Palmolive Co., 380 U.S. 374, 394-95 (1965); FTC v. National4

Lead Co., 352 U.S. 419, 429 (1957); Standard Oil Co. of Cal. v. FTC, 577 F.2d 653,662 (9th Cir. 1978); Thiret v. FTC, 512 F.2d 176, 180-81 (10th Cir. 1975); Spiegel,Inc. v. FTC, 411 F.2d 481, 484-85 (7th Cir. 1969); Swift & Co. v. United States,

(continued...)

Respondent’s Petition for Reconsideration

Respondent raises four issues in Excel Corporation’s Petition forReconsideration. First, Respondent contends the cease and desist orderin the January 30, 2003, Decision and Order is too broad (ExcelCorporation’s Pet. for Recons. at 2-6).

A cease and desist order must bear a reasonable relation to theunlawful practice found to exist. As discussed in the January 30, 2003,4


(...continued)4

317 F.2d 53, 56 (7th Cir. 1963); Gellman v. FTC, 290 F.2d 666, 670 (8th Cir. 1961);Carter Products, Inc. v. FTC, 268 F.2d 461, 498 (9th Cir.), cert. denied, 361 U.S. 884(1959).

Decision and Order, Respondent violated section 201.99(a) of theRegulations (9 C.F.R. § 201.99(a)) by failing to make known to hogsellers that it was changing the formula to estimate lean percent prior topurchasing hogs on a carcass merit basis from those sellers. The Orderissued in the January 30, 2003, Decision and Order reads, as follows:

ORDER

Respondent, its agents and employees, directly or indirectlythrough any corporate or other device, in connection with itspurchases of livestock on a carcass merit basis, shall cease anddesist from:

(a) Failing to make known to sellers, or their dulyauthorized agents, prior to purchasing livestock, the factors thataffect Respondent’s estimation of lean percent, including, but notlimited to, any change in the formula used to estimate lean percent;and

(b) Failing to make known to sellers, or their dulyauthorized agents, prior to purchasing livestock, the details of thepurchase contract, including, when applicable, the expected dateand place of slaughter, carcass price, condemnation terms,description of the carcass trim, grading to be used, accounting, andany special conditions.

In re Excel Corporation, 62 Agric. Dec. 196, 250 (2003).

Paragraph (a) of the January 30, 2003, Order addresses Respondent’sviolations of section 201.99(a) of the Regulations (9 C.F.R. § 201.99(a));namely, Respondent’s failure to make known to hog sellers thatRespondent was changing the formula to estimate lean percent prior to


325

See note 4.5

FTC v. Colgate-Palmolive Co., 380 U.S. 374, 395 (1965) (stating the Commission6

is not limited to prohibiting the illegal practice in the precise form in which it is foundto have existed in the past; holding it is reasonable for the Commission to frame itsorder broadly enough to prevent the respondents from engaging in similar illegalpractices in the future); Consumer Sales Corp. v. FTC, 198 F.2d 404, 408 (2d Cir.1952) (stating the Commission’s power is not limited to proscribing only the particularpractice used in the past; it may also prohibit variations of the practice to prevent thepractice from reappearing in a slightly altered form), cert. denied, 344 U.S. 912 (1953).

purchasing hogs on a carcass merit basis from those sellers. AsRespondent contends, paragraph (a) of the January 30, 2003, Order goesbeyond Respondent’s precise unlawful practice by ordering Respondentto make known to livestock sellers, rather than just hog sellers, factorsthat affect Respondent’s estimation of lean percent, rather than just achange in the formula to estimate lean percent. However, a cease anddesist order need not exactly mirror the violation found to exist; instead,a cease and desist order need only bear a reasonable relation to theunlawful practice found to exist. The power to issue a cease and desist5

order is not limited to proscribing only the precise unlawful practicefound to exist, but includes power to prohibit variations of the unlawfulpractice to prevent the practice from reappearing in a slightly alteredform. Paragraph (a) of the January 30, 2003, Order is designed to6

prohibit variations of Respondent’s unlawful practice to preventRespondent’s unlawful practice from reappearing in a slightly alteredform. Therefore, I reject Respondent’s contention that paragraph (a) ofthe January 30, 2003, Order is too broad.

Respondent also objects to paragraph (b) of the January 30, 2003,Order even though it closely tracks section 201.99(a) of the Regulations(9 C.F.R. § 201.99(a)) (Excel Corporation’s Pet. for Recons. at 6).

Paragraph (b) of the January 30, 2003, Order prohibits Respondent,in connection with its purchases of livestock on a carcass merit basis,from failing to make known to sellers, prior to purchasing livestock, the


In re Excel Corporation, 62 Agric. Dec. 196, 250 (2003).7

33 Fed. Reg. 2760 (1968) (RX 50 at 25).8

HRI, Inc. v. EPA, 198 F.3d 1224, 1244 n.13 (10th Cir. 2000); Wyoming Outdoor9

Council v. United States Forest Service, 165 F.3d 43, 53 (D.C. Cir. 1999).

details of the purchase contract. Respondent correctly points out that the7

preamble of the final rulemaking document promulgating section201.99(a) of the Regulations (9 C.F.R. § 201.99(a)) states the regulationrequires packers purchasing livestock on a carcass merit basis to makeknown to the seller only the significant details of the purchase contract.8

However, section 201.99(a) of the Regulations (9 C.F.R. § 201.99(a))does not limit the details of the purchase contract that a packer mustmake known to the seller. Language in the preamble of a regulation isnot controlling over the language of the regulations itself; however, thepreamble of a regulation is evidence of an agency’s contemporaneousunderstanding of its rules. I conclude the plain meaning of section9

201.99(a) of the Regulations (9 C.F.R. § 201.99(a)) is not superceded byan unadorned limitation in the preamble of the final rulemaking documentpromulgating section 201.99(a) of the Regulations (9 C.F.R. §201.99(a)). Therefore, I decline to change paragraph (b) of the Orderissued January 30, 2003, to limit to significant details of the purchasecontract the details Respondent must disclose to a seller.

Respondent further asserts that paragraph (b) of the January 30,2003, Order places Respondent at a severe competitive disadvantagebecause Respondent, and only Respondent, would be exposed to criminalsanctions for violating the language of paragraph (b) of the January 30,2003, Order (Excel Corporation’s Pet. for Recons. at 6).

Paragraph (b) of the January 30, 2003, Order requires Respondent tocease and desist from failing to comply with section 201.99(a) of theRegulations (9 C.F.R. § 201.99(a)). All packers are required to complywith section 201.99(a) of the Regulations (9 C.F.R. § 201.99(a)).Therefore, I reject Respondent’s contention that paragraph (b) of theJanuary 30, 2003, Order places Respondent at a severe competitive


327

disadvantage vis-a-vis other packers. Moreover, even if I were to findthat an appropriate cease and desist order happened to place a particularpacker at a competitive disadvantage, it would constitute no basis for myprecluding issuance of the cease and desist order.

Second, Respondent relies on section 202(a) of the 21st CenturyDepartment of Justice Appropriations Authorization Act to contend thecease and desist order in the January 30, 2003, Decision and Ordershould expire after no longer than 3 years (Excel Corporation’s Pet. forRecons. at 6-7).

Section 202(a) of the 21st Century Department of JusticeAppropriations Authorization Act amends 28 U.S.C. by adding a newsection which requires reports to Congress of settlements andcompromises of actions, as follows:

§ 530D. Report on enforcement of laws

(a) REPORT.—(1) IN GENERAL.—The Attorney General shall

submit to the Congress a report of any instance in which theAttorney General or any officer of the Department ofJustice—

. . . .(C) approves . . . the settlement or compromise . . . of

any claim, suit, or other action— . . . .

(ii) by the United States (including any agency orinstrumentality thereof) pursuant to an agreement,consent decree, or order (or pursuant to anymodification of an agreement, consent decree, ororder) that provides injunctive or other nonmonetaryrelief that exceeds, or is likely to exceed, 3 years induration: Provided, That for purposes of this clause,the term “injunctive or other nonmonetary relief”shall not be understood to include the following,where the same are a matter of public record—


. . . .(III) requirements or agreements merely to

comply with statutes or regulations[.]. . . .(e) APPLICABILITY TO THE PRESIDENT AND TO

E X E C UT I V E A G E N C I E S A N D M I L I T A R YDEPARTMENTS.—The reporting, declaration, and otherprovisions of this section relating to the Attorney General andother officers of the Department of Justice shall apply . . . to thehead of each executive agency or military department (as defined,respectively, in sections 105 and 102 of title 5, United StatesCode) that establishes or implements a policy described insubsection (a)(1)(A) or is authorized to conduct litigation, and tothe officers of such executive agency.

28 U.S.C. § 530D(a)(1)(C)(ii)(III), (e). As an initial matter, section 202(a) of the 21st Century Department of

Justice Appropriations Authorization Act is not applicable to thisproceeding because the parties did not settle or compromise thisproceeding; instead, I issued the January 30, 2003, Decision and Orderonly after the parties litigated the matter. Moreover, even if the 21stCentury Department of Justice Appropriations Authorization Act wereapplicable to this proceeding, the cease and desist order in theJanuary 30, 2003, Decision and Order merely requires Respondent tocomply with the Packers and Stockyards Act and the Regulations; thus,the exemption in 28 U.S.C. § 530D(a)(1)(C)(ii)(III) would apply to thisproceeding. Finally, section 202(a) of the 21st Century Department ofJustice Appropriations Authorization Act does not prohibit the issuanceof a cease and desist order that exceeds, or is likely to exceed, 3 years induration. Therefore, I reject Respondent’s contention that, based on the21st Century Department of Justice Appropriations Authorization Act,the cease and desist order issued January 30, 2003, should be modifiedto expire after no longer than 3 years.

Third, Respondent contends I erroneously characterized its violationsof section 201.99(a) of the Regulations (9 C.F.R. § 201.99(a)) as


329

See Mahon v. Stowers, 416 U.S. 100, 106 (1974) (per curiam) (stating the chief10

evil at which the Packers and Stockyards Act is aimed is the monopoly of the packers,enabling them unduly and arbitrarily to lower prices to the shipper who sells andunduly and arbitrarily to increase the price to the consumer who buys); Denver UnionStock Yard Co. v. Producers Livestock Mktg. Ass’n, 356 U.S. 282, 289 (1958) (statingthe Packers and Stockyards Act is aimed at all monopoly practices, of whichdiscrimination is one); Jackson v. Swift Eckrich, Inc., 53 F.3d 1452, 1460 (8th Cir.1995) (stating the Packers and Stockyards Act has its origins in antecedent antitrustlegislation and primarily prevents conduct which injures competition); Farrow v.United States Dep’t of Agric., 760 F.2d 211, 214 (8th Cir. 1985) (stating the Packersand Stockyards Act gives the Secretary of Agriculture broad authority to deal with anypractices that inhibit the fair trading of livestock by stockyards, marketing agencies,and dealers); Rice v. Wilcox, 630 F.2d 586, 590 (8th Cir. 1980) (stating one purposeof the Packers and Stockyards Act is to protect the owner and shipper of livestock andto free the owner from fear that the channels through which his product passed, throughdiscrimination, exploitation, overreaching, manipulation, or other unfair practices,might not return to him a fair return for his product); Van Wyk v. Bergland, 570 F.2d701, 704 (8th Cir. 1978) (stating one purpose of the Packers and Stockyards Act is toassure fair trade practices in the livestock marketing industry in order to safeguardfarmers and ranchers against receiving less than the true market value of theirlivestock); Solomon Valley Feedlot, Inc. v. Butz, 557 F.2d 717, 718 (10th Cir. 1977)(stating one purpose of the Packers and Stockyards Act is to make sure that farmers andranchers receive true market value for their livestock and to protect consumers fromunfair practices in the marketing of meat products); Pacific Trading Co. v. Wilson &Co., 547 F.2d 367, 369 (7th Cir. 1976) (stating the Packers and Stockyards Act is astatute prohibiting a variety of unfair business practices which adversely affect

(continued...)

“grave.” Respondent argues that its alleged violations of the Regulationsare not grave because: (1) Complainant did not demonstrate thatRespondent harmed hog producers; (2) Respondent took immediateremedial action once informed of the alleged violations; and(3) Respondent’s alleged violations were neither intentional nordeliberate. (Excel Corporation’s Pet. for Recons. at 7-9.)

I disagree with Respondent’s contention that I commit error bycharacterizing as grave its violations of section 201.99(a) of theRegulations (9 C.F.R. § 201.99(a)). Two of the primary purposes of thePackers and Stockyards Act are to prevent economic harm to livestockproducers and to maintain open and free competition.10


(...continued)10

competition); Hays Livestock Comm’n Co. v. Maly Livestock Comm’n Co., 498 F.2d925, 927 (10th Cir. 1974) (stating the chief evil sought to be prevented or corrected bythe Packers and Stockyards Act is monopolistic practices in the livestock industry);Glover Livestock Comm’n Co. v. Hardin, 454 F.2d 109, 111 (8th Cir. 1972) (statingthe purpose of the Packers and Stockyards Act is to prevent economic harm toproducers and consumers), rev’d on other grounds, 411 U.S. 182 (1973); Bruhn’sFreezer Meats of Chicago, Inc. v. United States Dep’t of Agric., 438 F.2d 1332, 1337-38 (8th Cir. 1971) (stating the purpose of the Packers and Stockyards Act is to assurefair trade practices in the livestock-marketing and meat-packing industry in order tosafeguard farmers and ranchers against receiving less than the true market value oftheir livestock and to protect consumers against unfair business practices in themarketing of meats and other products); Swift & Co. v. United States, 393 F.2d 247,253 (7th Cir. 1968) (stating the purpose of the Packers and Stockyards Act is to preventeconomic harm to producers and consumers); United States Fidelity & Guaranty Co.v. Quinn Brothers of Jackson, Inc., 384 F.2d 241, 245 (5th Cir. 1967) (stating one ofthe basic objectives of the Packers and Stockyards Act is to impose upon stockyards thenature of public utilities, including the protection for the consuming public that inheresin the nature of a public utility); Safeway Stores, Inc. v. Freeman, 369 F.2d 952, 956(D.C. Cir. 1966) (stating the purpose of the Packers and Stockyards Act is to preventeconomic harm to the growers and consumers through the concentration in a few handsof the economic function of the middle man); Bowman v. United States Dep’t of Agric.,363 F.2d 81, 85 (5th Cir. 1966) (stating one of the purposes of the Packers andStockyards Act is to ensure proper handling of shipper’s funds and their propertransmission to the shipper); United States v. Donahue Bros., Inc., 59 F.2d 1019, 1023(8th Cir. 1932) (stating one purpose of the Packers and Stockyards Act is to protect theowner and shipper of livestock and to free the owner from fear that the channelsthrough which his product passed, through discrimination, exploitation, overreaching,manipulation, or other unfair practices, might not return to him a fair return for hisproduct); Philson v. Cold Creek Farms, Inc., 947 F. Supp. 197, 200 (E.D.N.C. 1996)(stating the Packers and Stockyards Act was enacted to regulate the business of packersby forbidding them from engaging in unfair, discriminatory, or deceptive practices ininterstate commerce, subjecting any person to unreasonable prejudice in interstatecommerce, or doing any of a number of acts to control prices or establish a monopolyin the business); Pennsylvania Agric. Coop. Mktg. Ass’n v. Ezra Martin Co.,495 F. Supp. 565, 570 (M.D. Pa. 1980) (memorandum opinion) (stating one purposeof the Packers and Stockyards Act is to give all possible protection to suppliers oflivestock); United States v. Hulings, 484 F. Supp. 562, 567 (D. Kan. 1980)(memorandum opinion) (stating one purpose of the Packers and Stockyards Act is toprotect farmers and ranchers from receiving less than fair market value for their

(continued...)


331

(...continued)10

livestock and to protect consumers from unfair practices); Guenther v. Morehead,272 F. Supp. 721, 725-26 (S.D. Iowa 1967) (stating the thrust of the Packers andStockyards Act is in the direction of stemming monopolistic tendencies in business; theunrestricted free flow of livestock is to be preserved by the elimination of certain unjustand deceptive practices disruptive to such traffic; the Packers and Stockyards Act dealswith undesirable modes of business conduct by livestock concerns which are madepossible by the disproportionate bargaining position of such businesses); De Vries v.Sig Ellingson & Co., 100 F. Supp. 781, 786 (D. Minn. 1951) (stating the Packers andStockyards Act was passed for the purposes of eliminating evils that had developed inmarketing livestock in the public stockyards of the nation; controlling prices to preventmonopoly; eliminating unfair, discriminatory, and deceptive practices in the meatindustry; and regulating rates for services rendered in connection with livestock sales),aff’d, 199 F.2d 677 (8th Cir. 1952), cert. denied, 344 U.S. 934 (1953); MidwestFarmers, Inc. v. United States, 64 F. Supp. 91, 95 (D. Minn. 1945) (stating by thePackers and Stockyards Act, Congress sought to eliminate the unfair and monopolisticpractices that existed; one of the chief objectives of the Packers and Stockyards Act isto stop collusion of packers and market agencies; Congress made an effort to providea market where farmers could sell livestock and where they could obtain actual valueas determined by prices established at competitive bidding); Bowles v. Albert Glauser,Inc., 61 F. Supp. 428, 429 (E.D. Mo. 1945) (stating government supervision of publicstockyards has for one of its purposes the maintenance of open and free competitionamong buyers, aided by sellers’ representatives); In re Petersen, 51 B.R. 486, 488(Bankr. D. Kan. 1985) (memorandum opinion) (stating one purpose of the Packers andStockyards Act is to ensure proper handling of shippers’ funds and their propertransmission to shippers); In re Farmers & Ranchers Livestock Auction, Inc., 46 B.R.781, 793 (Bankr. E.D. Ark. 1984) (memorandum opinion) (stating one of the primarypurposes of the Packers and Stockyards Act and its regulations is to protect the welfareof the public by assuring that the sellers and buyers who are customers of the marketagencies and dealers are not victims of unfair trade practices); In re Ozark CountyCattle Co., 49 Agric. Dec. 336, 360 (1990) (stating the primary objective of the Packersand Stockyards Act is to safeguard farmers and ranchers against receiving less than thetrue value of their livestock); In re Victor L. Kent & Sons, Inc., 47 Agric. Dec. 692, 717(1988) (stating the primary purpose of the Packers and Stockyards Act is to assure notonly fair competition, but also, fair trade practices in livestock marketing and meatpacking); Harold M. Carter, The Packers and Stockyards Act, 10 Harl, AgriculturalLaw § 71.05 (1983) (stating among the more important purposes of the Packers andStockyards Act are to prohibit particular circumstances which might result in amonopoly and to induce healthy competition; prevent potential injury by stoppingunlawful practices in their incipiency; prevent economic harm to livestock and poultry

(continued...)


(...continued)10

producers and consumers and to protect them against certain deleterious practices ofmiddlemen; assure fair trade practices in order to safeguard livestock producers againstreceiving less than the true value of livestock as well as to protect consumers againstunfair meat marketing practices; insure proper handling of funds due sellers for the saleof their livestock; assure reasonable rates and charges by stockyard owners and marketagencies in connection with the sale of livestock; and assure free and unburdened flowof livestock through the marketing system unencumbered by monopoly or other unfair,unjustly discriminatory, or deceptive practices).

The January 30, 2003, Decision and Order makes clear Respondentimpeded competition by failing to notify hog producers of the change inthe formula for estimating lean percent. Thus, Respondent’s violationsundermine one of the primary purposes of the Packers and StockyardsAct and are, therefore, grave.

Further, Respondent advances no meritorious basis for its contentionthat its violations are not grave. Demonstration of economic harm toproducers is not essential to a finding that a violation is grave. Moreover,while remedial actions are encouraged and can be taken into accountwhen determining the sanction to be imposed, remedial actions neithereliminate the fact that the violations occurred nor change the gravity ofthose violations.

Further still, while the record indicates that, in 1997, Respondent wasnot aware that section 201.99 of the Regulations (9 C.F.R. § 201.99)required Respondent to notify hog producers of the change in the formulato estimate lean percent when not requested (Tr. 1653, 1861-64),Respondent’s violations were intentional because Respondent should haveknown that its failures to notify hog producers of the formula changewere violations of section 201.99 of the Regulations (9 C.F.R. § 201.99).As discussed in the January 30, 2003, Decision and Order, the recordestablishes that Respondent considered the Fat-O-Meat’er to be a formof grading. The formula Respondent used to estimate lean percent wasalso a part of the “grading” within the meaning of section 201.99 of theRegulations (9 C.F.R. § 201.99) as it was an element of Respondent’s


333

carcass evaluation process. Section 201.99 of the Regulations (9 C.F.R.§ 201.99) explicitly provides that packers purchasing livestock on acarcass merit basis must make known to the seller the grading to be usedprior to the purchase. Respondent’s officials made a conscious choicenot to tell hog producers about the change in the formula becausecompany officials believed that the formula was not a factor thatinterested hog producers or formed a basis for whether they sold hogs toRespondent (Tr. 1645-46, 1649, 1724-25). Respondent’s officials alsobelieved that hog producers who received more because of a change to amore accurate formula would be unhappy because they had been sellingin the past under an inaccurate formula, while hog producers whoreceived less because of the change would be upset (RX 47 at 2;Tr. 1689-93).

Fourth, Respondent contends I erroneously found that Respondent’sfailure to notify hog producers of the equation change impededcompetition (Excel Corporation’s Pet. for Recons. at 9-10).

I disagree with Respondent’s contention that its failure to notify hogproducers of the change in the formula to estimate lean percent did notimpede competition. Hog producers can compare prices and choose tocontinue to sell to Respondent or sell to Respondent’s competitors.However, Respondent impeded that choice in this case when it violatedsection 201.99(a) of the Regulations (9 C.F.R. § 201.99(a)) by failing tonotify hog producers of a change in the formula to estimate lean percent.Therefore, Respondent altered the price it would offer hog producerswithout the hog producers knowing that the price structure had changed.Had hog producers been alerted to the change, they could have shoppedtheir hogs to other packers to determine if they could obtain a better pricefor their hogs than Respondent’s price under its changed formula. AsComplainant states, the purpose of section 201.99 of the Regulations(9 C.F.R. § 201.99) “is to provide some basic level of similarity to allowsellers to evaluate different purchase offers” (Complainant’sPost-Hearing Brief at 91).

For the foregoing reasons and the reasons set forth in In re ExcelCorporation, 62 Agric. Dec. 196 (2003), Complainant’s Petition forReconsideration and Excel Corporation’s Petition for Reconsideration are


denied.Section 1.146(b) of the Rules of Practice (7 C.F.R. § 1.146(b))

provides that the decision of the Judicial Officer shall automatically bestayed pending the determination to grant or deny a timely-filed petitionfor reconsideration. Complainant’s Petition for Reconsideration andExcel Corporation’s Petition for Reconsideration were timely filed andautomatically stayed the January 30, 2003, Decision and Order.Therefore, since Complainant’s Petition for Reconsideration and ExcelCorporation’s Petition for Reconsideration are denied, I hereby lift theautomatic stay, and the Order in In re Excel Corporation, 62 Agric. Dec.196 (2003), is reinstated; except that the effective date of the Order is thedate indicated in the Order in this Order Denying Petitions forReconsideration.

For the foregoing reasons, the following Order should be issued.

ORDER

Respondent, its agents and employees, directly or indirectly throughany corporate or other device, in connection with its purchases oflivestock on a carcass merit basis, shall cease and desist from:

(a) Failing to make known to sellers, or their duly authorizedagents, prior to purchasing livestock, the factors that affect Respondent’sestimation of lean percent, including, but not limited to, any change in theformula used to estimate lean percent; and

(b) Failing to make known to sellers, or their duly authorizedagents, prior to purchasing livestock, the details of the purchase contract,including, when applicable, the expected date and place of slaughter,carcass price, condemnation terms, description of the carcass trim,grading to be used, accounting, and any special conditions.

This Order shall become effective on the day after service of thisOrder on Respondent.

__________


335

In re Excel Corporation, 62 Agric. Dec. 196 (2003).1

7 C.F.R. § 1.146(b).2

In re Excel Corporation, 63 Agric. Dec. ____ (Mar. 26, 2004) (Order Denying3

Pets. for Recons.).

In re: EXCEL CORPORATION.P. & S. Docket No. D-99-0010.Stay Order.Filed April 6, 2004.

Patrice H. Harps and Eric Paul, for Complainant.John R. Fleder, Philip C. Olsson, and Brett T. Schwemer, and Jeff P. DeGraffenreid,for Respondent.Order issued by William G. Jenson, Judicial Officer.

On January 30, 2003, I issued a Decision and Order concluding ExcelCorporation [hereinafter Respondent] violated the Packers andStockyards Act, 1921, as amended and supplemented (7 U.S.C. §§181-229) [hereinafter the Packers and Stockyards Act], and theregulations issued under the Packers and Stockyards Act (9 C.F.R. §§201.1-.200). Harold W. Davis, Deputy Administrator, Packers and1

Stockyards Programs, Grain Inspection, Packers and StockyardsAdministration, United States Department of Agriculture [hereinafterComplainant], and Respondent each filed a timely petition forreconsideration. Under the Rules of Practice Governing FormalAdjudicatory Proceedings Instituted by the Secretary Under VariousStatutes (7 C.F.R. §§ 1.130-.151), which are applicable to thisproceeding, a timely-filed petition for reconsideration automatically staysa decision of the Judicial Officer pending the determination to grant ordeny the petition for reconsideration. On March 26, 2004, I issued an2

Order: (1) denying the petitions for reconsideration; (2) lifting theautomatic stay; and (3) reinstating the January 30, 2003, Order.3

On March 31, 2004, Respondent filed “Excel Corporation’s Motionfor Stay of the Agency’s Order of March 26, 2004” [hereinafter Motion


for Stay]. Respondent states it intends to file a petition for review of theJudicial Officer’s January 30, 2003, and March 26, 2004, Orders in theUnited States Court of Appeals for the Tenth Circuit and requests a staypending the outcome of proceedings for judicial review. On April 2,2004, Patrice Harps, counsel for Complainant, informed the Office of theJudicial Officer, by telephone, that Complainant would not file a responseto Respondent’s Motion for Stay. On April 6, 2004, the Hearing Clerktransmitted the record to the Judicial Officer for a ruling on Respondent’sMotion for Stay.

For the foregoing reasons, the following Order should be issued.

ORDER

The Order in In re Excel Corporation, 62 Agric. Dec. 196 (2003),which was reinstated in In re Excel Corporation, 63 Agric. Dec. ___(Mar. 26, 2004) (Order Denying Pets. for Recons.), is stayed. This StayOrder is issued nunc pro tunc and is effective March 31, 2004. ThisStay Order shall remain effective until the Judicial Officer lifts the StayOrder or a court of competent jurisdiction vacates the Stay Order.

__________

JERRY HAYES MEATS, INC., ET AL.63 Agric. Dec. 337

337


DEFAULT DECISIONS

In re: JERRY HAYES MEATS, INC., AND JEROME A. HAYES.P&S Docket No. D-03-0016.Decision and Order.Filed December 23, 2003.

P&S - Default.

David A. Richman, for Complainant.Respondent, Pro se.Decision and Order issued by Jill S. Clifton, Administrative Law Judge.

Preliminary Statement

This proceeding was instituted under the Packers and Stockyards Act(7 U.S.C. § 181 et seq.) by a complaint filed by the DeputyAdministrator, Packers and Stockyards Programs, Grain Inspection,Packers and Stockyards Administration, United States Department ofAgriculture, alleging that Respondents willfully violated the Act and theregulations promulgated thereunder (9 C.F.R. § 201.1 et seq.). Thecomplaint and a copy of the Rules of Practice Governing FormalAdjudicatory Administrative Proceedings Instituted by the SecretaryUnder Various Statutes (7 C.F.R. § 1.130 et seq.), hereinafter “Rules ofPractice,” were mailed to the Respondents via certified mail on July 22,2003. Accompanying each complaint was a cover letter informing theRespondent that an answer must be filed within twenty (20) days ofservice, and that failure to file an answer would constitute an admissionof all of the material allegations in the complaint and a waiver of the rightto an oral hearing.

As indicated by the return date stamped on the return receipt card,Jerry Hayes Meats, Inc., (hereinafter the “Corporate Respondent”),received a copy of the complaint on July 25, 2003, and the return receiptcard was signed by Jerome A. Hayes (hereinafter the “Individual


Respondent”). The answer for the Corporate Respondent was due onAugust 14, 2003, or 20 days after service as specified in section 1.136(a)the Rules of Practice (7 C.F.R. § 1.136(a)). The copy of the complaintsent to the residence of the Individual Respondent was returned to theOffice of the Hearing Clerk marked “unclaimed.” The Hearing Clerk re-sent the complaint to the Individual Respondent by First Class U.S. Mailon August 15, 2003. Pursuant to section 1.147(c)(1) of the Rules ofPractice (7 C.F.R. § 1.147(c)(1)), if a complaint sent to the last knownresidence of a Respondent is returned marked by the postal service asunclaimed, the complaint is deemed to have been received by Respondentupon the date of remailing by ordinary mail to the same address. Servicehaving been effected upon the Individual Respondent on August 15,2003, the Individual Respondent’s answer was due on September 4,2003.

Accompanying each complaint was a cover letter informing theRespondent that an answer must be filed within twenty (20) days ofservice, and that failure to file an answer would constitute an admissionof all of the material allegations in the complaint and a waiver of the rightto an oral hearing. On September 23, 2003, the Hearing Clerk sent aletter to each of the Respondents indicating that more than twenty (20)days had elapsed since service of the complaint, and that it had notreceived an answer from either Respondent.

Respondents have failed to file an answer within the time periodprescribed by the Rules of Practice (7 C.F.R. §1.136), and the materialfacts alleged in the complaint, which are admitted by Respondents’ failureto file an answer, are adopted and set forth herein as findings of fact.

This decision and order, therefore, is issued pursuant to section 1.139of the Rules of Practice (7 C.F.R. §1.139).

Findings of Fact

1. Jerry Hayes Meats, Inc., the Corporate Respondent, is acorporation, incorporated under the laws of the State of New York, thebusiness mailing address of which is R.D. #1, Stratton Road, NewarkValley, New York 13811. 2. The Corporate Respondent is, and at all

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339

times material herein was: (a) Engaged in the business ofpurchasing livestock in commerce for the purpose of slaughter; and

(b) A packer within the meaning of that term as defined in theAct and subject to the provisions of the Act.

3. Respondent Jerome A. Hayes, also known as Jerry Hayes, theIndividual Respondent, is, and at all times material herein was:

(a) An individual whose address is 829 Taylor Road, Vestal,New York 13850;

(b) The president and 100% stockholder of the CorporateRespondent;

(c) Responsible for the direction, management and control of allbusiness activities of the Corporate Respondent;

(d) Engaged in the business of a packer buyer; and(e) Registered with the Secretary of Agriculture as a packer

buyer.4. On April 19, 1995, Respondents entered into a consent order in adisciplinary action against Respondents. The order, captioned P & SDocket No. D-95-12, requires that the Respondents cease and desistfrom: (a) operating without bond, (b) issuing insufficient funds checks forlivestock, (c) failing to pay for livestock purchases, (d) failing to pay,when due for livestock purchases, and (e) failing to maintain adequaterecords. The Respondents were also assessed a $10,500.00 civil penalty,jointly and severally.

5. The Corporate Respondent, under the direction, management andcontrol of the Individual Respondent, was notified by certified mail,received December 18, 2000, that the surety bond maintained inconnection with the livestock purchases of Jerry Hayes Meats, Inc. wouldterminate on January 14, 2001. Further, Respondents were notified that,if livestock operations under the Act were continued after that datewithout providing adequate bond coverage or its equivalent, Respondentswould be in violation of the Act and regulations. Notwithstanding suchnotice, Respondents have continued to engage in the business of a packerwithout maintaining an adequate bond or its equivalent as required by theAct and the regulations.

6. The Corporate Respondent, under the direction, management and


control of the Individual Respondent, in connection with its operationssubject to the Act, issued nineteen (19) checks in payment for livestockpurchases which were returned by the bank upon which they were drawnbecause the Corporate Respondent did not have and maintain sufficientfunds on deposit and available in the accounts upon which such checkswere drawn to pay such checks when presented.

7. The Corporate Respondent, under the direction, management andcontrol of the Individual Respondent, in connection with its operationssubject to the Act, purchased livestock and failed to pay, when due, thefull purchase price of such livestock.

8. The Corporate Respondent, under the direction, management andcontrol of the Individual Respondent, in connection with its operationssubject to the Act, failed to make and keep such accounts, records andmemoranda which fully and correctly disclose all transactions in itsbusiness as a packer under the Act. Specifically, the CorporateRespondent failed to make and keep the following records:

(a) Kill sheets; (b) Accounts receivable records; (c) Sales invoices;(d) Accounts payable records;(e) Purchase invoices for all livestock purchases;(f) Cash disbursements and cash receipts journals;(g) Check registers, check copies or check stubs showing date,

payee and amount of all checks written; and(h) Notices received from bank when checks are returned.

Order

By reason of the facts in Finding of Fact 3 herein, the IndividualRespondent is the alter ego of the Corporate Respondent.

By reason of the facts in Finding of Fact 5 herein the Respondentshave willfully violated sections 202(a) of the Act (7 U.S.C. 192(a)) andsections 201.29 and 201.30 of the regulations (9 C.F.R. 201.29, 201.30).

By reason of the facts in Findings of Fact 6 and 7 herein, the

JERRY HAYES MEATS, INC. AND JEROME A. HAYES63 Agric. Dec. 330

341

Respondents have willfully violated sections 202(a) and 409 of the Act(7 U.S.C. 192(a), 228b).

By reason of the facts in Finding of Fact 8 herein, the Respondentshave failed to keep such accounts, records, and memoranda as fully andcorrectly disclose all transactions involved in Respondents’ business asa packer under the Act.

Respondents Jerry Hayes Meats, Inc., and Jerome A. Hayes, and theiragents and employees, directly or through any corporate or other device,in connection with their activities subject to the Packers and StockyardsAct, shall cease and desist from:

1. Engaging in business in any capacity for which bonding is requiredunder the Act and regulations without filing and maintaining an adequatebond or its equivalent, as required by the Act and the regulations;

2. Issuing checks in purported payment for purchases of livestockwhich are returned unpaid by the bank upon which they are drawnbecause the Corporate Respondent does not have and maintain sufficientfunds on deposit and available in the accounts upon which such checksare drawn to pay such checks when presented;

3. Failing to pay, when due, the full purchase price of livestock; and4. Failing to pay the full purchase price of livestock.Respondents shall make and keep such accounts, records and

memoranda as fully and correctly disclose all transactions inRespondents’ business as a packer under the Act. Specifically, theRespondents shall make and keep the following records:

(a) Kill sheets; (b) Accounts receivable records;

(c) Sales invoices;(d) Accounts payable records;(e) Purchase invoices for all livestock purchases;(f) Cash disbursements and cash receipts journals;(g) Check registers, check copies or check stubs showing date,

payee and amount of all checks written; and(h) Notices received from bank when checks are returned.

Pursuant to section 203(b) of the Act (7 U.S.C. § 193(b)),


Respondents are assessed a civil penalty, jointly and severally, in theamount of Seventeen Thousand Dollars ($17,000.00).

This decision and order shall become final and effective withoutfurther proceedings thirty-five (35) days after service on Respondents, ifit is not appealed to the Judicial Officer by a party to the proceedingwithin thirty (30) days, pursuant to section 1.145 of the Rules of Practice(7 C.F.R. § 1.145).

Copies hereof shall be served upon the parties.[This Decision and Order became final February 26, 2004.-Editor]

__________

In re: RONALD C. PERKINS.P&S Docket No. D-03-0017.Decision and Order.Filed April 14, 2004.

P&S - Default.

Jeffrey H. Armistead, for Complainant.Respondent, Pro se.Decision and Order issued by Jill S. Clifton, Administrative Law Judge.

Preliminary Statement

[1] This proceeding was instituted under the Packers and StockyardsAct, 1921, as amended and supplemented (7 U.S.C. § 181 et seq.)(hereinafter often referred to as "the Act"), by a complaint filed on July18, 2003, by the Deputy Administrator, Packers and StockyardsPrograms, Grain Inspection, Packers and Stockyards Administration,United States Department of Agriculture, alleging that RespondentRonald C. Perkins willfully violated the Act and the regulations issuedthereunder (9 C.F.R. § 201.1 et seq.). [2] The complaint and a copy of the Rules of Practice GoverningFormal Adjudicatory Administrative Proceedings Instituted by theSecretary Under Various Statutes (7 C.F.R. § 1.130 et seq.), hereinafter

RONALD C. PERKINS63 Agric. Dec. 342

343

the Rules of Practice, were served upon Respondent Ronald C. Perkins(hereinafter often referred to as "Respondent") by certified mail onAugust 1, 2003. Accompanying the complaint was a cover letterinforming Respondent that he had 20 days from receipt to file an answer,and that failure to file an answer would constitute an admission of all ofthe material allegations in the complaint and a waiver of the right to anoral hearing. [3] Respondent failed to file an answer to the Complaint within 20days after August 1, 2003, the time prescribed in the Rules of Practice,7 C.F.R. § 1.136(a); to date, Respondent has not filed an answer to theComplaint. [4] The Rules of Practice provide that the failure to file an answerwithin the time provided under 7 C.F.R. § 1.136(a) shall be deemed anadmission of the allegations in the Complaint. 7 C.F.R. §1.136(c).Further, the failure to file an answer constitutes a waiver of hearing. 7C.F.R. § 1.139. Accordingly, the material allegations in the Complaintare adopted and set forth in this Default Decision as the Findings of Fact,and this Decision is issued pursuant to the Rules of Practice. 7 C.F.R.§ 1.139. See 7 C.F.R. §1.130 et seq.

Findings of Fact

[5] Respondent Ronald C. Perkins is an individual, whose currentmailing address is believed to be RR 1, Box 10, Danbury, Nebraska69026-9711. [6] Respondent is and at all times material herein was:

(a) Engaged in the business of a market agency buying oncommission, and of a dealer buying and selling livestock in commerce forhis own account; and

(b) Registered with the Secretary of Agriculture as a market agencybuying on commission, and as dealer to buy and sell livestock incommerce for his own account.[7] Respondent was served with a letter of notice on August 19, 2002,informing him that the $10,000.00 surety bond he maintained wasinadequate, and that a $35,000.00 surety bond was required to secure the


performance of his livestock obligations under the Act. Notwithstandingthis notice, Respondent continued to engage in the business of a marketagency and a dealer without maintaining an adequate bond or itsequivalent.

Conclusions

[8] By reason of the foregoing Findings of Fact, Respondent RonaldC. Perkins has willfully violated section 312(a) of the Packers andStockyards Act, 1921, as amended and supplemented (7 U.S.C. §213(a)); and sections 201.29 and 201.30 of the regulations issuedthereunder (9 C.F.R. §§ 201.29, 201.30).

Order

[9] Respondent Ronald C. Perkins, his agents and employees, directlyor indirectly through any corporate or other device, in connection with hisoperations subject to the Packers and Stockyards Act, 1921, as amendedand supplemented, shall cease and desist from engaging in business in anycapacity for which bonding is required under the Act, and the regulationsissued thereunder, without filing and maintaining an adequate bond or itsequivalent, as required by the Act and the regulations. [10] Respondent is suspended as a registrant under the Act until suchtime as he complies fully with the bonding requirements under the Actand the regulations. When Respondent demonstrates that he is in fullcompliance with such bonding requirements, and has paid the civilpenalty assessed in paragraph [11], a supplemental order will be issuedin this proceeding terminating the suspension. [11] Respondent is assessed a civil penalty in the amount of onethousand two hundred fifty dollars ($1,250.00), in accordance withsection 312(b) of the Act (7 U.S.C. § 213(b)). [12] This Decision and Order shall have the same force and effect as ifentered after a full hearing and shall be final and effective without furtherproceedings 35 days after service, unless an appeal to the Judicial Officeris filed within 30 days after service, pursuant to section 1.145 of the


345

Rules of Practice (7 C.F.R. § 1.145, see attached Appendix A). Copies of this Decision shall be served by the Hearing Clerk upon

each of the parties. [This Decision and Order became final May 27, 2004.-Editor]

* * *

APPENDIX A

7 C.F.R.:

TITLE 7—-AGRICULTURE

SUBTITLE A—-OFFICE OF THE SECRETARY OFAGRICULTURE

PART 1—-ADMINISTRATIVE REGULATIONS. . . .

SUBPART H—-RULES OF PRACTICE GOVERNINGFORMAL

ADJUDICATORY PROCEEDINGS INSTITUTED BY THESECRETARY UNDER

VARIOUS STATUTES. . .§ 1.145 Appeal to Judicial Officer.

(a) Filing of petition. Within 30 days after receiving service of theJudge's decision, if the decision is a written decision, or within 30 daysafter issuance of the Judge's decision, if the decision is an oral decision,a party who disagrees with the decision, any part of the decision, or anyruling by the Judge or who alleges any deprivation of rights, may appealthe decision to the Judicial Officer by filing an appeal petition with the


Hearing Clerk. As provided in § 1.141(h)(2), objections regarding evidence or a limitation regardingexamination or cross-examination or other ruling made before the Judgemay be relied upon in an appeal. Each issue set forth in the appealpetition and the arguments regarding each issue shall be separatelynumbered; shall be plainly and concisely stated; and shall contain detailedcitations to the record, statutes, regulations, or authorities being reliedupon in support of each argument. A brief may be filed in support of theappeal simultaneously with the appeal petition.

(b) Response to appeal petition. Within 20 days after the serviceof a copy of an appeal petition and any brief in support thereof, filed bya party to the proceeding, any other party may file with the Hearing Clerka response in support of or in opposition to the appeal and in suchresponse any relevant issue, not presented in the appeal petition, may beraised.

(c) Transmittal of record. Whenever an appeal of a Judge'sdecision is filed and a response thereto has been filed or time for filing aresponse has expired, the Hearing Clerk shall transmit to the JudicialOfficer the record of the proceeding. Such record shall include: thepleadings; motions and requests filed and rulings thereon; the transcriptor recording of the testimony taken at the hearing, together with theexhibits filed in connection therewith; any documents or papers filed inconnection with a pre-hearing conference; such proposed findings of fact,conclusions, and orders, and briefs in support thereof, as may have beenfiled in connection with the proceeding; the Judge's decision; suchexceptions, statements of objections and briefs in support thereof as mayhave been filed in the proceeding; and the appeal petition, and such briefsin support thereof and responses thereto as may have been filed in theproceeding. (d) Oral argument. A party bringing an appeal mayrequest, within the prescribed time for filing such appeal, an opportunityfor oral argument before the Judicial Officer. Within the time allowed forfiling a response, appellee may file a request in writing for opportunityfor such an oral argument. Failure to make such request in writing,within the prescribed time period, shall be deemed a waiver of oralargument. The Judicial Officer may grant, refuse, or limit any request for


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oral argument. Oral argument shall not be transcribed unless so orderedin advance by the Judicial Officer for good cause shown upon request ofa party or upon the Judicial Officer's own motion.

(e) Scope of argument. Argument to be heard on appeal, whetheroral or on brief,

shall be limited to the issues raised in the appeal or in the response to theappeal, except that if the Judicial Officer determines that additional issuesshould be argued, the parties shall be given reasonable notice of suchdetermination, so as to permit preparation of adequate arguments on allissues to be argued.

(f) Notice of argument; postponement. The Hearing Clerk shalladvise all parties of the time and place at which oral argument will beheard. A request for postponement of the argument must be made bymotion filed a reasonable amount of time in advance of the date fixed forargument.

(g) Order of argument. The appellant is entitled to open andconclude the argument.

(h) Submission on briefs. By agreement of the parties, an appealmay be submitted for decision on the briefs, but the Judicial Officer maydirect that the appeal be argued orally.

(i) Decision of the [J]udicial [O]fficer on appeal. As soon aspracticable after the receipt of the record from the Hearing Clerk, or, incase oral argument was had, as soon as practicable thereafter, the JudicialOfficer, upon the basis of and after due consideration of the record andany matter of which official notice is taken, shall rule on the appeal. Ifthe Judicial Officer decides that no change or modification of the Judge'sdecision is warranted, the Judicial Officer may adopt the Judge's decisionas the final order in the proceeding, preserving any right of the partybringing the appeal to seek judicial review of such decision in the properforum. A final order issued by the Judicial Officer shall be filed with theHearing Clerk. Such order may be regarded by the respondent as finalfor purposes of judicial review without filing a petition for rehearing,reargument, or reconsideration of the decision of the Judicial Officer.

[42 FR 743, Jan. 4, 1977, as amended at 60 FR 8456, Feb. 14, 1995; 68


FR 6341, Feb. 7, 2003]

7 C.F.R. § 1.145

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In re: CURTIS W. MINZENMAYER.P. & S. Docket No.-04-0001.Decision Without Hearing By Reason of Default.Filed April 22, 2004.

Decision and Order By Marc Hillson, Chief Administrative Law Judge.

P&S - Default.

This proceeding under the Packers and Stockyards Act (7 U.S.C.' 181 et seq.), hereinafter the AAct,@ was instituted by a complaint filedon December 16, 2003, by the Deputy Administrator, Packers andStockyards Programs, Grain Inspection, Packers and StockyardsAdministration (GIPSA), United States Department of Agriculturealleging that Respondent willfully violated the Act.

The complaint and a copy of the Rules of Practice Governing FormalAdjudicatory Administrative Proceedings Instituted by the SecretaryUnder Various Statutes (7 C.F.R. ' 1.130), hereinafter the ARules ofPractice,@ were served on Respondent by certified mail on December 27,2003. The complaint was accompanied by a service letter from theHearing Clerk informing Respondent that an answer must be filed withintwenty days of service and that failure to file an answer would constitutean admission of all of the material allegations of fact in the complaint andwaive Respondent=s right to an oral hearing.

Respondent has failed to file an answer within the time periodprescribed by section 1.136 of the Rules of Practice (7 C.F.R. ' 1.136).Respondent=s failure to file an answer constitutes an admission of all ofthe material allegations of fact in the complaint. Based on these

CURTIS W. MINZENMAYER63 Agric. Dec. 348

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admissions, Complainant=s motion for the issuance of a default decision,made pursuant to section 1.139 of the Rules of Practice (7 C.F.R. '1.139), is hereby granted and this Decision and Order are entered withouthearing or further procedure.

Findings of Fact

1. Curtis W. Minzenmayer, referred to herein as the ARespondent,@ isan individual whose business mailing address is 2400 Arrowhead, Apt.243, Abilene, Texas 79604.2. Respondent Minzenmayer, at all times material herein, was:(a) Engaged in the business of buying and selling livestock incommerce for his own account; and(b) Registered with the Secretary of Agriculture as a dealer to buyand sell livestock in commerce.3. Respondent Minzenmayer, in connection with his operations subjectto the Act, on or about the dates and in the transactions set forth inparagraph II(a) of the complaint, purchased livestock and failed topay, when due, the full purchase price of such livestock. 4. Respondent Minzenmayer, in connection with his operations subjectto the Act, on or about the dates and in the transactions set forth inparagraph II(b) of the complaint, issued a check in payment forlivestock purchases which check was returned unpaid by the bankupon which it was drawn because Respondent Minzenmayer did nothave and maintain sufficient funds on deposit and available in theaccounts upon which such check was drawn to pay such check whenpresented.5. As of January 16, 2003, Respondent Minzenmayer had failed topay for livestock in the amount of $166,583.83 due in the transactionsset forth in paragraph II(a) of the complaint.

Conclusions

By reason of the facts found herein, Respondent Minzenayer has


willfully violated sections 312(a) and 409 of the Act (7 U.S.C. ''213(a) and 228b).

Order

Respondent Curtis W. Minzenmayer, his agents and employees,directly or through any corporate or other device, in connection with hisactivities subject to the Packers and Stockyards Act, shall cease anddesist from:1. Issuing checks in payment for livestock purchases withoutmaintaining sufficient funds on deposit and available in the account uponwhich such checks were drawn to pay such checks when presented;2. Failing to pay, when due, the full purchase price of livestock; and3. Failing to pay the full purchase price of livestock. Respondent is hereby suspended as a registrant under the Act for a periodof five years. Provided, however, that upon application to Packers andStockyards Programs a supplemental order may be issued terminating thesuspension of Respondent at any time after 180 days upon demonstrationby Respondent of circumstances warranting such termination; andprovided further, that this order may be modified upon application toPackers and Stockyards Programs to permit Respondent=s salariedemployment by another registrant or a packer after the expiration of 180days of suspension and upon demonstration of circumstances warrantingmodification of the order.Pursuant to the Rules of Practice governing procedures under the Act,this Order shall become final without further proceedings thirty-five (35)days after service hereof, unless appealed to the Secretary by a party tothe proceeding within thirty (30) days after service as provided in sections1.139 and 1.145 of the Rules of Practice (7 C.F.R. '' 1.139 and 1.145).Copies of this Decision and Order shall be served upon the parties.

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CONSENT DECISION

(Not published herein - Editor)


Harley Crouse and Brian Crouse d/b/a Harley Crouse & Sons. P&SDocket No. D-03-0021. 1/7/04.

Cecil Clark McNeese. P&S Docket No. D-03-0011. 2/3/04.

Patsy L. Leone, Jr. P&S Docket No. D-03-0001. 4/20/04.

Lee Andrew Jarosek, II d/b/a Joe Cattle Company. P&S Docket No. D-03-0022. 5/7/04.

Curtis W. Minzenmayer. P&S Docket No. D-04-0001. 5/27/04.

Documents

AGRICULTURE DECISIONS - USDA 63 - Book 1, Part 2.pdfP. & S. Docket No. D-99-0010. Order Denying Petitions for Reconsideration. Filed March 26, 2004. P&S – P ack ers and Sto ck yards